PARIS — At Le Bon Marché department store last weekend, the first shipment of Louis Vuitton’s special monogram handbags decorated with cherry blossoms sold out in two hours flat. And in the U.S., the waiting list for the...
PARIS — At Le Bon Marché department store last weekend, the first shipment of Louis Vuitton’s special monogram handbags decorated with cherry blossoms sold out in two hours flat. And in the U.S., the waiting list for the limited-edition styles — a collaboration between Vuitton creative director Marc Jacobs and Japanese artist Takashi Murakami — has surpassed 7,000 names.
Bernard Arnault, chairman of LVMH Moët Hennessy Louis Vuitton, related those two anecdotes in support of his optimistic outlook for 2003, despite the tense geopolitical situation and a grim economic forecast.
Announcing that net profits totaled $609.6 million last year after a dismal 2001 during which they virtually evaporated to $8.7 million, the luxury titan said "out of this world" brands like Louis Vuitton, Hennessy and Dom Perignon — which has the highest profit margins in the group — would help it weather the storm. Last year, operating profits grew 29 percent to $2.2 billion on a sales increase of 3.8 percent to $13.95 billion, as reported. Dollar figures have been converted from the euro at current exchange.
"Let’s be careful making generalizations about the luxury sector. What counts is individual companies," he urged an audience of analysts and journalists gathered at the Four Seasons hotel here. "We are in a good position to face an uncertain environment. Whenever we have encountered a crisis, our group has come out stronger. We want to pull through this uncertain period in an improved position and with more market share."
Arnault said LVMH would continue to focus its investment and energies on brands and stores with the most profit potential — and quietly divest "nonstrategic" and "marginal" brands and assets.
As reported, LVMH recently sold its one-third stake in Michael Kors, and its majority stakes in the niche beauty brands Hard Candy and Urban Decay. Pressed for further details during the question-and-answer period, Arnault declined to give a laundry list of companies that might be on the block, but noted some are already in negotiations.
For example, DFS and Sephora, long ago dubbed "noncore" by Arnault, are still in turnaround mode. "We are not going to address the issue of disposal before we have reached recovery," he said. Asked about Celine and Loewe, among the fashion brands said to be considered for divestiture, Arnault would only say he’s "reviewing" their performance and potential and taking a more "hands-on" approach.Analysts said the results were roughly in line with expectations.
Jacques-Franck Dossin, luxury analyst at Goldman Sachs, said LVMH’s massive restructuring efforts last year seem to be bearing fruit. "The operating performance and cash flow generation are improving rapidly," he said. Asked if Arnault’s optimism is justified in the face of an uncertain climate, Dossin replied: "It seems like the strength of the core Louis Vuitton brand is continuing. It is completely flying above the rest of the sector."
In a research note, Antoine Colonna, luxury analyst at Merrill Lynch, which has a "buy" recommendation on the stock, said the investment firm would not change its earnings forecasts, but noted that risks to its price projections for the stock include terrorism, war and a protracted economic crisis in the U.S.
The performance represents a substantial rebound for LVMH after its struggles to post even a small profit in 2001 as it confronted a drop in tourism in the wake of the Sept. 11 terrorist attacks, a weak yen and heavy losses at DFS and the auction house Philips.
But LVMH’s selective retail division moved into the black last year, with operating profits of $21.9 million versus losses of $169.6 million in 2001. Arnault noted that Sephora cut its losses in half in the U.S. last year and is expected to turn a profit in 2003.
Operating income in the fashion and leather goods division inched up 2 percent to $1.42 billion, led by Louis Vuitton. Vuitton president Yves Carcelle noted that new products, such as the Tambour watch and Louis Vuitton Cup collection, represented 11 percent of sales last year. He added that Louis Vuitton plans to expand its Paris flagship on the Champs Elysées to span the entire building. Briefly discussing other brands in the division, Carcelle described 2002 as a "transitional" year for Donna Karan and Fendi.
The perfume and cosmetics division saw operating income grow 8 percent to $176.5 million. The watch and jewelry division was the only unprofitable unit, and LVMH attributed its $14.3 million deficit to the loss of third-party manufacturing agreements and heavy investments in communications and brand development.
LVMH said it logged organic growth of 7 percent for the first two months of 2003, with Louis Vuitton growing at double-digit rates in the period. It has set an objective of a "tangible" increase in operating income for 2003.Shares of LVMH rose 0.3 percent to close at $41.88 Thursday on the Paris bourse. The firm will propose a dividend of 88 cents at its annual shareholders’ meeting May 18.
There'll be no rest for those headed to Europe for men's, as Paris just closed the gap with Milan. According to a provisional calendar released by the Chambre Syndicale, Paris Men's Week will now open a day earlier on January 16. See new highlights on the official lineup on WWD.com. #wwdnews #wwdfashion (📷: @kukukuba)
BREAKING: Jonathan Saunders is leaving @DVF. The designer has resigned from his position as chief creative officer of Diane von Furstenberg, the company said in a statement on Friday. At the time of his hire, von Furstenberg said Saunders’ arrival symbolized and facilitated her stepping back from the day-to-day duties that occupy the work of a full-time creative director. The British designer joined DVF in May 2016 and was in charge of all product categories. #wwdnews
For @versace_official’s spring ad campaign, the brand emphasized the archival prints from the spring tribute collection dedicated to the late Gianni Versace. Closing out the show were five of Gianni’s favorite models: Cindy, Naomi, Carla, Helena, and Claudia. Bowing on December 18, the new campaign is yet another tribute to supermodel-dom as the images by Steven Meisel are fronted by @iamnaomicampbell, @cturlington, @gisele and more. #wwdfashion
Four-time Oscar-nominated actress Annette Bening has been waiting 20 years to play Gloria Graham in "Film Stars Don't Die in Liverpool," which will be released on December 29. The movie about Graham – a Hollywood star known for her controversial relationship with a younger Englishman named Peter Turner – is based off a memoir Turned wrote. "She felt vulnerable to him, because she loved him, she really did love him. And anyone that we really truly are in love with, we re vulnerable to in a very deep way," said Bening. Read our full interview with the modern icon of an actress on WWD.com. #wwdeye (📷: @ninebagatelles; Styled by @cristinaehrlich)
The crisp white button down: a staple that can be dressed up or down and accessorized throughout the decades. Here, on a Art Basel-goer in 2017 on the left and on the iconic Audrey Hepburn in “Roman Holiday” in 1953 on the right. #tbt #wwdfashion (📷: Andrew Morales)
Known for her work with @victoriassecret, 25-year-old model @georgiafowler is raising her profile in Hollywood. Fowler stars in @vincecamuto’s holiday campaign, which launched in partnership with “Pitch Perfect 3.” “Almost every shoot with Vince Camuto, I’ve had to face a fear…It was definitely a challenge. I’m so grateful for it, though. I’ve always wanted to be a pop star, so that was the perfect chance,” Fowler said. Head to WWD.com to read about Fowler’s experience modeling, including at the #VSFashionShow, and her relationship with Nick Jonas. #wwdeye (📷: @jilliansollazzo)
EXCLUSIVE: Huda Kattan just became the first beauty influencer to land a major beauty deal. Kattan's business, @hudabeauty, has received a minority investment from private equity firm TSG Consumer Partners. The brand, which industry sources say is on track to do $200 million in retail sales for 2017, will receive support on product, retail and geographic expansion through the deal. Get all the details on the deal and read @_a_collins' interview with Kattan on WWD.com. Link in bio. (📷: @jgreenery) #wwdbeauty #wwdnews
Peruvian model @juanaburga_official – who is known for walking the runways of @rodarte, @viviennewestwood and @torybuch – is making the move to the big screen with drama “Los Últimos.” The film premiered in Argentina in November and arrives in the U.S. and Europe in 2018. On making the switch from modeling to acting, Burga told WWD: “It’s a completely different thing – a lot of people think it’s similar or try to connect things, especially like getting used to the camera or being looked at all the time or playing these different characrers, but film is a completely different story.” #wwdeye (📷: @jgreenery)
London’s newly opened @designmuseum will look back on the life and work of Azzedine Alaïa in a show that the designer helped to curate before he died of heart failure last month. The retrospective, which Alaïa had worked on with Mark Wilson, chief curator of the @groningermuseum, will look at the impact of his work worldwide. The show, “Azzedine Alaïa: The Couturier,” will run from May 10 to October 7. Read more about the exhibit on WWD.com #wwdnews #wwdfashion (📷: @zefashioninsider)